When Doctors Advise Investors
Published: August 17, 2005

It's getting harder and harder to disentangle the
medical profession from financial conflicts of
interest. The familiar concern has involved doctors
who take money from pharmaceutical or biotechnology
companies for consulting or research. Such ties
inevitably call into question how objective such
doctors can be in conducting research, offering advice
to government agencies or prescribing drugs for
patients. It is never wholly clear whether the doctor
is focused on the medical needs of patients or has one
eye on the prospects of a financial patron.

Now, as described yesterday in an article by Stephanie
Saul and Jenny Anderson in The Times, there is an
additional concern: doctors who are paid to give
advice to investment firms. The worry here is not that
doctors will somehow shortchange their patients, but
that their advice to financial firms may distort the
markets, offering sophisticated investors the kind of
insider information that the ordinary investor can't
get. With little notice or alarm, this form of
financial consulting has expanded rapidly. An article
on June 1 in The Journal of the American Medical
Association concluded that almost 10 percent of the
nation's 700,000 doctors had entered into formal
consulting relations with the investment industry. The
percentage of doctors from academic medical centers,
where much of the clinical research of interest to
investors takes place, was thought to be considerably
higher.

The financial firms seeking advice include hedge
funds, venture capital firms, investment bankers and
stockbrokers, among others. They are assisted by
specialized companies that enroll doctors and link
them with information-hungry financial firms. A doctor
is typically paid on an hourly basis - at rates
ranging from $200 to more than $1,000 per hour - for
consulting that can be done by telephone or face to
face. This kind of consulting looks like a recipe for
trouble. The information most prized by investors is
some hint as to how an experimental drug is performing
in ongoing clinical trials or informed guidance about
problems that may trouble the Food and Drug
Administration.

Although the doctors are routinely warned not to
reveal confidential or proprietary information, it is
a virtual certainty that when the scope of consulting
is so large, there will be disclosures, even if they
are inadvertent. The best antidote would be a pledge
of abstinence backed by the ethical guidelines of
medical societies. Any doctor who has inside
information about clinical trials or the F.D.A.'s
thinking should not do consulting work for investment
firms.





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